JobsOhio will likely survive the election

It looks likely that JobsOhio, the private-sector economic development nonprofit created by outgoing Gov. John Kasich, will survive, regardless of whether Democrat Richard Cordray or Republican Mike DeWine becomes the next governor. Both candidates issued statements indicating they intend to keep the state's principal business attraction organization outside of state government.

It looks likely that JobsOhio,, the private-sector economic development nonprofit created by outgoing Gov. John Kasich, will survive in 2019, regardless of whether Democrat Richard Cordray or Republican Mike DeWine becomes the next governor.

Both candidates issued statements indicating that they intend to keep the state's principal business attraction organization outside of state government.

The only question may be who will get to choose the nonprofit's next leader: the current, nine-member board, all named by Kasich, or the board that will lead the organization after the new governor fills five seats that have four-year terms that expire in July 2019?

John Minor, who became Jobs- Ohio's president and chief investment officer in July 2012, told Crain's he plans to leave the job, but he is vague about details.

"I plan to leave JobsOhio at some point, but I do not have a set timeframe or a specific date," he said in a telephone interview. "The board and I have had ongoing discussions about succession planning relative to my role as leader of JobsOhio."

Asked whether the board would wait to appoint a successor until the new governor filled board seats with directors of his choosing, Minor said that has come up in the succession conversations the board is having but he would not be more specific about when he would leave and when the board would name his replacement.

"Come July of 2019 there are five seats whose terms end," he said. "Whoever the next governor is may actually decide to reappoint some of those board members. It's hard to know what the makeup of the board will be."

Asked about the candidates' assessment of JobsOhio and the naming of Minor's successor, the DeWine campaign said JobsOhio has served Ohio well and that the candidate would like to name Minor's successor.

"We've seen tremendous job growth in Ohio since its inception and have an unemployment rate near historic lows," the campaign said in an emailed statement. "If John Minor decides to leave, the board should proceed with identifying a list of qualified successors. We're hopeful that the time frame for a final selection can wait until the new or reappointed board members are in place."

The Cordray campaign also indicated its support of JobsOhio.

"As governor, I'll maintain and reform JobsOhio so that it creates more economic opportunity for all Ohioans by investing in our homegrown small businesses across the state, in addition to effectively competing to bring more jobs and companies to Ohio," an emailed statement read. "I'll also work to improve our workforce development programs and keep Ohio an open and tolerant state so that businesses can find the skilled workers they need and feel comfortable here, and so our children can stay here, start families and invest in our communities."

The Cordray campaign did not respond to a second email late last week about the timing of choosing Minor's replacement.

The board members who hold seats with terms that end in July 2019 are James Boland, retired vice chairman of the Ernst & Young accounting firm and former president, CEO and vice chairman of the Cavaliers Operating Co.; Gary Heminger, chairman and CEO of Marathon Petroleum Corp. of Findlay; Stephen E. Markovich, senior vice president of OhioHealth, a Central Ohio hospital group; Larry Kidd, principal and CEO of Reliable Staffing Services of Jackson; and Barbara Snyder, president of Case Western Reserve University.

Other members of the board are William Batchelder of Mentor, former speaker of the Ohio House of Representatives; John Bishop, chairman of the executive committee of the Columbus-based Motorists Insurance Group; and Thomas Williams, president and CEO of North American Properties of Cincinnati; and Minor.

Minor joined JobsOhio as a managing director when it was created in July 2011. He was named president and chief investment officer in November 2012, replacing Mark Kvamme. Both Minor and Kasich had worked at the Lehman Brothers investment banking firm before its collapse in 2008.

JobsOhio took shape during the 2010 election campaign. Kasich said then he would replace the state's department of development with a private, nonprofit economic development corporation that, he said, the governor would lead.

After Kasich defeated Democratic incumbent Ted Strickland to become governor in 2011, House Bill 1 created JobsOhio. To create a revenue stream to staff the organization, to market the state to businesses internationally and to offer financial incentives, the Legislature allowed the state to lease the profitable, state-run liquor agency to JobsOhio. The new nonprofit issued long-term bonds to pay for the use of the liquor business and used the profits to provide grants and loans to induce businesses to move to the state or to help existing businesses expand operations in Ohio rather than elsewhere.

The idea drew on programs in other states, including economically booming states like Texas and Florida. Those states had moved economic development from a state agency to a nonprofit entity that could have a freer hand when it came to using tax dollars to attract new business to the state. While these private economic development organizations, including JobsOhio, generally are considered to be able to negotiate more quickly and easily with a business choosing among expansion sites in several states, they are criticized for high pay to staff and a lack of transparency in their handling of what is, ultimately, public money.

In a meeting at Crain's office July 16, Minor said that in a performance review conducted by the McKinsey & Co. consulting firm, JobsOhio ranked among the top five in a group of 17 similar economic development organizations that included all of its Midwest peers as well as organizations in faster-growing states such as California, Florida and Texas.

However, Tim Bartik, senior economist at the W.J. Upjohn Institute for Employment Research in Kalamazoo, Mich., responded to that assessment in a tweet saying that while the McKinsey report provides some useful analysis of Ohio's strengths and weaknesses, it doesn't tell the whole story.

"(T)his report does not in any way provide an impact evaluation or a performance assessment or a benefit-cost analysis of how the world differs with JobsOhio's various programs, versus a world without those programs," he wrote. "We need better performance standards for economic development evaluation reports. There is no evidence that privatizing economic development either helps or hurts economic development."

Bartik is among a small group of critics of privatized state economic development programs.

Good Jobs First, a Washington, D.C., nonprofit, in a 2014 survey of these organizations, including JobsOhio, said that these privatizations have done a poor job of reporting their results publicly.

"Three-fourths of major state development programs still fail to disclose actual jobs created or workers trained, and only one in 11 discloses wages actually paid," the report stated. "Despite having three separate sources of disclosure, the quality of disclosure for (JobsOhio) has been declining."